MUMBAI: The insurance regulator is designing eight standard products
that companies will be allowed to launch without seeking its nod, a move
that could help revive the ailing sector.
A senior official said insurance plans based on these products will come under the 'use and file' system, which allows automatic approval after 15 days of intimation to the Insurance Regulatory and Development Authority (IRDA), the sector regulator, if the insurer has complied with the norms.
The new products being designed will be participating and non-participating endowment plans, whole life policy with par and without participating, money back, Ulip, and pension plan with two variants of deferred and immediate annuity, the IRDA official said.
Sales of life insurance products had plummeted in the last fiscal year as the insurance industry was hit by a fall in the equities market that took the sheen off unit-linked products. In the April-August period of the current year, income from sale of new life insurance policies dropped 3.3%.
To give a boost to the sector, the government on Monday announced a slew of measures, including easier know your customer norms. It also said that the regulator, in consultation with insurers, would design some standard products that could be used under the 'use and file' system. The IRDA official said that the new products would be based on some of the LIC tables.
Participating, or par endowment plans, refer to with-profit policies where bonus is declared every year depending on the performance of the fund. These products dominate traditional business of life insurance companies.
Non-participating, or non-par endowment, policies invest in safer instruments but they do not give bonus. Also, policyholders know the maturity amount at the time of buying the product.
The simple, whole-life policies are products where premium is paid for a limited period while the life is covered for a longer term, usually about 85 years. The unit-linked plan, with investment mostly in equities, will be based on a single index.
The finance ministry has asked the regulator to expand the list of such standard products over a period of time.
The IRDA is also framing guidelines for traditional products and will come up with the new norms by November 30.
Insurance companies have welcomed the steps being taken by the government. "Steps on KYC, expanding the scope of group savings product, and further streamlining of the product approval process, will help the industry grow," said V Philip, managing director and CEO of Bajaj Allianz.
A senior official said insurance plans based on these products will come under the 'use and file' system, which allows automatic approval after 15 days of intimation to the Insurance Regulatory and Development Authority (IRDA), the sector regulator, if the insurer has complied with the norms.
The new products being designed will be participating and non-participating endowment plans, whole life policy with par and without participating, money back, Ulip, and pension plan with two variants of deferred and immediate annuity, the IRDA official said.
Sales of life insurance products had plummeted in the last fiscal year as the insurance industry was hit by a fall in the equities market that took the sheen off unit-linked products. In the April-August period of the current year, income from sale of new life insurance policies dropped 3.3%.
To give a boost to the sector, the government on Monday announced a slew of measures, including easier know your customer norms. It also said that the regulator, in consultation with insurers, would design some standard products that could be used under the 'use and file' system. The IRDA official said that the new products would be based on some of the LIC tables.
Participating, or par endowment plans, refer to with-profit policies where bonus is declared every year depending on the performance of the fund. These products dominate traditional business of life insurance companies.
Non-participating, or non-par endowment, policies invest in safer instruments but they do not give bonus. Also, policyholders know the maturity amount at the time of buying the product.
The simple, whole-life policies are products where premium is paid for a limited period while the life is covered for a longer term, usually about 85 years. The unit-linked plan, with investment mostly in equities, will be based on a single index.
The finance ministry has asked the regulator to expand the list of such standard products over a period of time.
The IRDA is also framing guidelines for traditional products and will come up with the new norms by November 30.
Insurance companies have welcomed the steps being taken by the government. "Steps on KYC, expanding the scope of group savings product, and further streamlining of the product approval process, will help the industry grow," said V Philip, managing director and CEO of Bajaj Allianz.
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